Government Already Pays Some Paid-Leave Costs

(Pixabay)Parents of newborns often use public assistance to finance time off from work.

The United States currently does not have a national policy to provide workers with paid time off from work following the birth or adoption of a child. But taxpayers are nonetheless paying to support new parents who need time off. Pew Research Center surveyed employed adults who wanted or needed time off from work but lacked paid-leave benefits. Seventeen percent of respondents — and 48 percent of those with incomes under $30,000 — reported going on public assistance to finance their parental leave.

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This is important to keep in mind as people debate the idea (recently introduced as legislation by Senator Marco Rubio) of reforming Social Security to allow new parents to access a small share of their retirement benefits to help finance paid time off from work after having a new child. This proposal is designed not to increase anyone’s benefits from government: Those who opt to take the parental-leave benefit would delay their eligibility for Social Security retirement benefits to offset the cost. Some of Social Security’s benefits would be paid out early, but taxpayers’ liabilities wouldn’t increase overall.

While the proposal is designed to be revenue-neutral for the Social Security program, the public should be aware that it has the potential to reduce government spending elsewhere. If some people who would otherwise have gone on public assistance opt instead to take — and ultimately pay back through reduced future retirement benefits — Social Security parental leave, then taxpayers are better off, having saved money in reduced welfare payments.

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When studying the Rubio proposal, the Urban Institute estimated that 1.4 million parents would opt to take advantage of the parental-leave option. Presumably most of these parents would otherwise lack access to paid parental leave, because if they didn’t, they would have little incentive to participate in the program. If 17 percent of these people (as estimated by Pew) would otherwise end up using public assistance during that time period, that’s more than 200,000 fewer workers relying on government for assistance.

Other research supports the idea that access to paid leave decreases dependency on government assistance. An April 2012 Rutgers study concluded that “women, particularly low-income women, who take paid leave and then return to work report a lower likelihood of receiving any public assistance, fewer dollars in public assistance, and a lower likelihood of receiving food stamp . . . income than do women who continue working and take no leave whatsoever in the year following the birth of their child.” They have numbers around this finding: Low-income women who took paid leave after giving birth reported receiving $505 less in public assistance than women who took unpaid leave.

If the Social Security option encouraged even half of 17 percent of its participants to take $500 less in public assistance, that could be a saving of about $60 million each year. That may not sound like much in the scope of our trillion-dollar government, but it is meaningful, especially since the program is already designed to be neutral for taxpayers. Additionally, estimates ignore that women with access to paid leave are more likely to return to work after giving birth and to be employed for years in the future. This means that increased access to paid leave has the potential to reduce demands for public assistance, as well as to increase household income and tax receipts.

One argument made against the proposed Social Security paid-leave option is that, for the first time, government would be explicitly offering a benefit to give workers paid time off from work. This is a compelling and important point. Yet it’s also important to recognize that in many ways government already is effectively financing paid time off from work through other safety-net programs. Reforming Social Security to give people the option to access benefits early, but requiring them to make a trade-off and take responsibility for that additional leave, may be a better — and more conservative — way to structure the safety net.

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